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Fossil Fuel Subsidies

Have you ever wondered what government benefits the fossil fuel industry enjoys? Here is a comprehensive breakdown: Fossil Fuel Subsidies.

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Klassy Evans and Adam Khan, editors of this web site and authors of the book Fill Your Tank With Freedom, would love to talk to your group about fuel competition. Print out this PDF document to bring to your group's program director: Saving Lady Liberty. It prints best if you download the file to your computer and then print it.

Wednesday, June 29, 2011

The following is written by Alan Anderson, president of the non-profit National Association of Proficient Renewable Biofuels (NAPRB).

As we look forward to a long weekend patriotically celebrating our nation's independence, we should take the time to remember that there are those who revel in the fact that in one aspect of our lives, we are not independent.

We can celebrate all we want about being free from English rule and having the freedom to make our own laws governing our future, but the harsh reality of the world shows we aren't truly as independent as we use to be. Forces from around the world have conspired to keep us (and most of the rest of the world) in a stranglehold.

The Organization of Petroleum Exporting Countries (OPEC) was founded in 1960 to increase the price of the crude oil produced by their respective countries. According to US government, this year OPEC will break a trillion dollars in earnings for the first time, soundly beating their previous record of $965 billion in 2008.

As of November 2010, OPEC members collectively hold 79% of world crude oil reserves and 44% of the world’s crude oil production, affording them considerable control over the global market. OPEC's influence on the market has been widely criticized since it began to control the world price of oil.

So when you hear American politicians talking about drilling more and lowering prices as the way to "Oil Independence," just remember they don’t control OPEC’s influence on the market, and they can't.

Oil's strategic status stems from its virtual monopoly over fuel for transportation, which underlies the global economy and our entire way of life. The most effective and most efficient way to reduce or eliminate oil's strategic status is to use technologies already available to us — to use vehicles and facilities we already have, to use car manufacturing techniques we already use, to use liquid fuel delivery systems we already have, and to use fuels that come from different sources.

In Fiscal Year 2008, "Americans paid $900 billion for their oil supply," writes Zubrin, "and the world as a whole paid $3.6 trillion. These petroleum costs were up by a factor of ten from what they were in FY 1999, and they represent a huge, highly regressive tax on the world economy." And it continues to increase. Abe Shackleton writes:

Americans paid $80 billion for oil in 1999 and they paid $900 billion ten years later. This is equivalent to a "33 percent increase in income taxes across the board," according to Zubrin.

And 60 percent of that money was handed over to foreign governments. Let that sink in. We're paying a lot more now than we were paying then — for the same product. It doesn't seem like we've been spending that much on gas, but the money we pay for oil doesn't only go into our own car's gas tank. The "income tax" is across the board. Rising oil prices increase the cost of everything shipped somewhere, which means just about everything.

This transfer of wealth from the rest of the world to OPEC nations is terrorism. Al Qaeda has explicitly made attacking oil supplies their goal, calling oil "the provision line and the feeding to the artery of the life of the crusader's nation." From 2004 to 2008, attacks on oil fields in Iraq alone prevented one to two million barrels of oil from entering the world market, which kept the oil market $20-25 per barrel higher than it would have been otherwise.

This extra "tax" on the economies of Europe and the United States from terrorist attacks on oil facilities added up to an additional $65 to $85 billion dollars a year leaving Western economies. Terrorists have attempted to disable Abqaiq (in Saudi Arabia), the largest oil processing facility in the world. Several attempts to drive explosive-filled trucks and planes into Abqaiq were luckily thwarted. Had they been successful, they could have easily sent oil above $200 a barrel for an extended period of time, causing incalculable economic losses and a far greater transfer of wealth to Middle Eastern governments.

So now we see that we can’t drill our way to Energy Independence. The way out is to cure ourselves of our oil addiction. There are two ways to do that. One is to make fuels in America that are non-petroleum based, and the other is to produce vehicles that run on those fuels. We need to use what we have, like large crops such as corn and even more importantly, sugar crops such as energy beets.

If American ethanol production used 50% corn and 50% sugar crops to produce ethanol, it would reduce the price of fuel by nearly 50%. The ethanol business has had its ups and downs in the past 40 years but done smartly it will be the future of our economic recovery.

The second factor is the vehicles we drive. We need a policy that encourages the production of cars that can run on fuels other than gasoline (or in addition to gasoline). Flex Fuel Vehicles (FFV) are an obvious way to begin this transition. FFV technology is being used around the world in cars, trucks, buses, and even OTR trucks.

With both of these solutions in place we would dramatically reduce the strategic status of oil and eliminate it as a strategic commodity. America’s national security would improve and our economy would rebound with increased capital and jobs.

America needs politicians who aren’t afraid to stand up for the American people and not for oil executives that use our oil addiction to profit by financing political careers. Every American needs to tell their state and federal leaders that they support change in transportation energy policy that includes Flex Fuel Vehicles and fuels made from crops grown right here in America. One way to do that is to write your congressional representatives and tell them to support The Open Fuel Standard Act of 2011 (HR 1687).

Someday soon Americans can again call ourselves independent, but not until we kick the oil addiction and free ourselves from OPEC's rule.